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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Compensation: displaced tenants: agricultural: chargeable to CGT

51TC492Following Davis v Powell, 51TC492, statutory compensation payable under Section 60 AHA 1986 is not chargeable to Capital Gains Tax. In that case, the taxpayer quit his holding as a consequence of a notice to quit issued by the landlord. The Courts held that the compensation was exempt from Capital Gains Tax as it was paid after the tenancy had come to a natural end and did not arise from the disposal of an asset. Essentially, the reasoning was the same as that later used by the Court in Drummond v Brown, 58TC67, see CG72351- CG72352.